Why Cisco Will Win the SDN War

Note: I generally shy away from mentioning specific vendors in this blog, but this is a question I get asked a lot so I decided to post the answer publicly. In the spirit of full disclosure it should also be noted that I am a former employee of Cisco. Despite that, I manage to be optimistic about their future in SDN.

Software Defined Networking (SDN) is finally becoming interesting with the announcement that VMWare and Cisco will both release products for general sale this year. Add this to the offerings from such other players as Brocade and Big Switch, and suddenly we have a game on.

SDN purists will be disappointed in these choices because the unfortunate truth is that few (if any) of them are really SDN. Each of the manufacturers offering an SDN-ish solution has a vested interest in differentiation, some more so than others, so the idea of cheap commodity switches with no built-in intelligence will be dead in the water.

I’m sure everyone will have opinions about which technology is best, but let’s face it–that won’t decide the winner (anyone remember Betamax vs VHS, or ATM vs Ethernet?). Here’s why I believe Cisco will be the eventual victor in this battle for the enterprise:

Installed Base Inertia: Cisco owns three quarters of the Enterprise Routing market, and more than 70% of the Enterprise Switching market. That’s a lot of stuff, and few organizations will be willing to replace it all at once. If you want to be in this game, then the table stakes are you have to be able to play nice with Cisco.

An Army of Cisco Certifieds: There are currently over two million Cisco certified professionals. No other vendor comes close to that amount other than Microsoft, and they aren’t a player in the SDN market. It stands to reason that if you’re Cisco certified, you will prefer Cisco if for no other reason than job security.

Who Controls the Budget?: It’s only natural that software guys will prefer VMWare, but unfortunately for VMWare the software guys don’t have budget to replace major pieces of the network. The networking guys do. And as we’ve already pointed out, in the majority of cases the network guys will prefer Cisco.

Overlay (ie, VMWare) Seems Like a Kludge: Perception is reality, and the perception I get from those who have looked into NSX is that its an overlay. One more layer to manage is not a benefit, it’s a kludge. NSX is actually an interesting technology that has a lot of good things going for it, but VMware will have to manage this perception.

Cold, Hard Cash: Cisco has a lot of it. Over a hundred Billion, with a “B”. Senior management within Cisco knows that winning SDN could determine the very sustainability of the company, so if they have to deploy that cash in marketing efforts, loss leader deals, or even buying the competition, they will.

As sure as the sun will come up tomorrow, there will be comments to this post explaining why Cisco’s technology for SDN is inferior to (insert your favorite manufacturer here). While we could argue the finer technical points all day (and I won’t), the bottom line is that it won’t be technology that decides who wins the game. It will be adoption by those who have the money to spend.

Allen, software doesn’t actually exist, it’s virtual. There will always have to be hardware somewhere for that software to control, just as an OS controls the phone, PC, or tablet it resides on. The idea of an all-software network isn’t possible. And when you go from 1Gig to 10Gig to 100Gig and up to accommodate growing traffic, that will be a forklift. No way around that.

I think all of us worked for Cisco at one point in our career. You would be wrong about SW (Overlay), it exist and available today. I will agree having cash does help and Cisco will need every penny with up coming market changes .

To be honest Cisco hasn’t really solved any networking problems . They seem to think by stealing Plexxi ideas combined with specialized overly priced hardware wins . How does that win when customers have to forklift the entire network that’s not available today and unproven? The door will be wide open for change and its started with some of the largest data centers such Facebook, Google , Microsoft …

You seem to be forgetting that Telcos (the folks who shall out the hard cash for Cisco’s equipment) no longer want to give the big money and this NFV effort is being pushed by the Telcos. Ultimately, it is not Cisco’s cash (with the B) that will win the war but the money from the Telcos that will favor the SW centric approach of VMware over the HW centric approach of Cisco.

Let’s start with Cash. Cisco has about $50B, no $100B in Cash and Short term securities. It’s balance sheet ready assets of $55B but about 1/2 are Good Will and Intangibles.

The rest of your thesis is ‘enterprise’. I’m happy to defer to your knowledge about the outcome there. But the growth market in Cloud and IaaS. In these areas, all the infrastructure, Networking, Compute and Storage are filled with new vendors, not Cisco, HP, IBM, Oracle, Dell, etc.

I think it will be interesting to see just how much Cisco can buy there way into sustained prominence. Many would say Cisco’s success has left them with the innovator’s dilemma, but that is interesting as they aren’t really the innovator anymore. The innovator’s dilemma is the market hedge you build by having won great success on disruptive technologies. But here is the thing, who actually invents all the latest cloud tech – its not Cisco and hasn’t been for a while. Every IT shop has been trying for years to operate more like cloud environments, the big clouds really delivered the meaningful vision of automation and elasticity that every technology shop out there seeks to deliver today. People primarily invest in closed and proprietary technologies when they can offer very unique and differentiated technology with clear and specific business value. But there is nothing that Cisco has offered to enterprises for some time now that web-tech guys weren’t already doing with open technologies, Cisco is following the cloud guys. And if Cisco were to do something really cool and unique it would take a minute for the cloud guys to create a replica in open source.
But, the biggest factor is really the convergence between layers, clearly cisco wants to own ‘network services’, but consider in the context of a PaaS, what is the difference between a network service and any other platform service? The application, orchestration and service delivery frameworks are the same. Cisco isn’t just competing with network players and server players now but is also at direct strategic odds with Microsoft and many of the large cloud players as everyone has to grow, nobody can just be good at anything with our wall street culture, all companies must grow infinitely at all costs right? lol. I think your right in that market share in the networking industry is not going to wholesale change overnight, but I do believe we are on the path toward much more diverse and healthy market conditions.

About Me

Hi, I'm Randal Scott King, but feel free to call me Scott. I'm the managing partner of Brilliant Data, a consulting firm specializing in analyzing data for companies looking for a new competitive advantage. I'm also the technical reviewer for a couple of books on Big Data and the author of a video training on Hadoop by Packt Publishing.
Read More...